UPDATE 1-Sharp, Enel in Italian solar power venture

(Recasts with Enel's announcement)

TOKYO, May 18 (Reuters) - Enel SpA (ENEI.MI: Quote, Profile, Research) and Japan's Sharp Corp (6753.T: Quote, Profile, Research) will join forces on solar power generation, aiming for a total output capacity of 161 megawatts by the end of 2011, Italy's largest power company said in a statement.

The Nikkei business daily said on Sunday that the venture would be among the world's largest solar power operations.

The two companies signed an agreement to form a strategic partnership in the photovoltaic sector, Enel said in the statement on its Web site.

The Italian company said the two companies would develop power-generating fields in Italy.

It also said that they planned to build a plant in Italy to manufacture thin-film solar cell panels developed by Sharp.

The investment would possibly amount to several tens of billions of yen, the Nikkei said.

Enel, a world leader in the generation of electricity from renewable sources, said it was expanding its efforts in this sector and environmentally friendly technologies, with a programme of investments totalling 7.4 billion euros ($11.5 billion) by the end of 2012.

By building overseas plants, Sharp, which is trying to expand its clean energy business and reduce production costs, aims to raise its annual production capacity for solar cell panels to 6,000 megawatts from the current 710 megawatts, the Nikkei paper said.

No one at Sharp could be reached for comment. ($1=.6420 Euro) (Reporting by Aiko Hayashi; Editing by Alan Raybould)